|Posted on April 14, 2014 at 5:15 PM||comments (0)|
If you are deciding whether countries should specialize and trade, then you must use the law of comparative advantage (AKA the Ricardian Model). First establish which country will be exporting which good. To do this, simple look at which country has the lower opportunity cost in producing the good. The country with the lowest opportunity cost will specialize in that good and export that good.
To determine if the trade terms are beneficial, do the following: Imports divided by Exports
If the Imports / Exports are > than the opportunity cost of the country's export then it is a good trade for that country.
You must do the same thing for the other country since it is exporting the other good if it has a comparative advantage in the production of the other good.
This No Bull Review video explains it the best!
AP Macroeconomics Unit 1 Basic Economic Concepts
|Posted on April 14, 2014 at 5:10 PM||comments (0)|
A change in any of the following will cause the supply curve to shift to the right or to the left:
1. Resource prices
2. Alternative output price changes
3. Technology and productivity
4. Number of sellers
5. Expectations of future prices
6. Subsidies to producers
7. Taxes on production
See the No Bull Review video for more information on these shift factors of supply
AP Macroeconomics / AP Microeconomics Unit 1 Basic Economic Concepts
|Posted on April 14, 2014 at 5:00 PM||comments (0)|
The demand curve will shift if there is a change in the determinants of demand. Here are the shift factors of demand:
1. Tastes and preferences
2. Income of buyers
3. Number of buyers
4. Expectations of prices in the future
5. Substitute good prices
6. Complementary good price
Watch the No Bull Review video below for more information on shifting demand:
AP Macroeconomics / AP Microecnomics Unit 1 Basic Economic Concepts